Palm kept its word this week and disappointed investors with dismal 3Q results. Investors responded by slashing another 20% from the embattled company's shares. The financial situation doesn't seem very good, and time is running out to turn things around as Palm continues to loses the big bets it has placed on the Pre and Pixi.
This is how bad things are: A couple of analysts trimmed their price targets for Palm shares to $0. The stock is trading at a 52-week low, and at half the 50-day moving average. The total investment by Elevation Partners, some $475 million, would be 70% of the market cap of the entire company — if they could take it out dollar for dollar.
Several analysts downgraded the company and one of them, Peter of Misek Canaccord Adams, basically sees no future for Palm. "With what appears to be roughly 12 months of cash on hand, an accelerating burn rate, a complete lack of earnings visibility, and substantial debt and preferred equity, we no longer see any value in the company's common equity," he said in a note.
The good news? The phone is becoming just an app on a smart, portable device. The disruptive contours of that smart, portable device is still in flux, and about to get buffeted again by the release of Apple's iPad in about two weeks.
This is anybody's game — heck, if even Google is worried about the next Google, why can't Palm be the next Palm?
Here are five ideas humbly suggested to get the iconic company back on track.
One of the Pre's buried advantages is its ability to create a broadband hotspot for up to five devices. So does the MiFi, which is known for that – and nothing else. And guess what one of the next big consumer jihad will be about? (We hope) the inability to tether whatever device you have to whatever connected device you also have.
In the olden days I used to take people's breath away by being able to surf the Web on a Palm using my Bluetooth-enabled phone. The setup was tedious, but no company created technical impediments to prevent me from doing so. Now we live in a world where every device needs its own broadband plan as a crass way of increasing revenue. That's revolting, and consumers will revolt. Get ahead of this. And at the same time, stick it to your nemesis by becoming ...
That's right. There are a lot of bruised feelings about the need for a separate plan for those who will be buying the 3G-enabled iPad at the end of April. We've written about the insidiously unnecessary design decision to use one type of SIM in the iPad and another in the iPhone, making the connection unswappable and untetherable. Tethering will be a battleground, and you have nothing to loss by siding with consumers.
Some iPhone users have told me in all seriousness that owning an iPad will make it less necessary to have an iPhone. They are thinking about going for a junk handset and basic plan and living an iPad-centric life. This means you have a wedge issue with Apple fans who maybe need just a little push so they will want a phone which, far from junk, is arguably its equal.
Apple did you a big favor by making a smartphone that convinced normal people they needed one, and you need to slip seriously into your well-deserved seat at the table.
None of the newest cool kids really know your history. I'm no expert on the fine points of the OS game, as commenters will no doubt point out for me. But you did come up with the first bitchin' portable OS, and it still rocks. From at least the average user's perspective Android has pretty much the same utility – multitasking being high on the list – but you were there first. More than a decade ago.
This might be one of those instances where nostalgia works. "This isn't your father's WebOS – but, thank Heaven, it is ..."
Update: 3/26 1030 ET: A fan of WebOS has gone where Palm has yet to with a video advertisement that makes our even gruff but unlovable Gadget Lab colleague Charlie Sorrel "totally ... want to buy a Pre." It's a brilliant example of how (commenters note) Palm can connect the dots to a generation that doesn't appreciate how the legendary informs the new generation of smart phones and generate enthusiasm. That's what marketing is all about: taking the underlying facts and making the most of them to connect emotionally with prospects. Palm has a lot to work with here, and doesn't.
Your ads tell us too much, and not enough. How did Verizon and Google market the Droid to the press? GPS. They planted the seed of an idea that the Droid was was the killer GPS appliance, good enough for your car. Everything is going mobile now. Nothing matters if you can't solve the 'What can I do from here" problem.
Sure, some of this is an app issue. Oh, right. You used to have the most exhilarated third-party development base in the history of computing. Make your GPS integration the envy of all the others, and if you think it already is, make us believe it starting now.
Ok, this one is easy, but it also isn't. Remember when some people went nuts because they didn't get the satisfaction they felt they deserved when the Nexus One rolled out – no phone support from Google, etc?
The only differentiator anymore is the customer relationship. This is especially true in the crowded smartphone market, where (let's face it) all devices pretty much do the same thing and the hardware/software differences nibble at the edges — wired.com gave equally high marks for the Pre, Nexus One and the iPhone.
Apple provides you with a Genius, but you have to go to them, and schedule, and wait. Lots of the time customers just need their hand held, answer a dumb question — for you to sound like you understand, and not in the scripted way that we are know is phony.
So: Answer the phone on the second ring. Have a human answer. Have that person say, as if they were the local bank: "This is Palm. Fred speaking. How may I direct your call?" "Fred" may hear a lot of nonsense before he can get an idea of where to send that call. That's a skill – hire some former suicide-line volunteers. Pay these people more than they'd get doping "the same thing" somewhere else. And reconnect with customers who don't want to hate you, but are prepared to in an internet second.
We've said it before: Palm is worth saving. But Palm isn't likely to save itself by more of the same. Sometimes you don't have to burn the boats if you zag in time. We'd like to think there's still time for Palm.
See Also:
- Shut Up and Text: Why Voice Is Just Another Phone Feature ...
- Guess What? Google Fears the Next 'Google'
- Palm Acknowledges the Pre Isn't an 'Anything' Killer. But Is It ...
- Apple iPad's Tiny SIM Is Just There to Mess With You
- Google Nexus One Leaves Customers Sour
- Palm Unveils Its Long-Awaited Smartphone, the Pre
- PreDevCamp Aims to Burgeon Palm WebOS Development
- Palm Energizes Developers for the Pre Phone
